Bonds and Forex note stronger US data while gold surges

June 20, 2014

Interesting reaction in markets to some really good economic news in the US with the Philly Fed index printing 17.8 solidly higher than the 14 expected.

“70% of respondents expect the firm’s production to increase during the second half of the year”

Really that’s another indication that the US economy is recovering from its weather induced flat spot but it’s easily discounted because Fed Chair Janet Yellen told us yesterday she’s a big dove on rates and the economy. But it is a good number nonetheless.

US dollar bulls there is hope for you yet it seems. Maybe if you are patient that is.

On stocks at the close the Dow climbed back above even rising 0.1% to 16,921 while the S&P 500 was up a similar amount closing at 1,959 but the Nasdaq fell 0.1% to 4,359.

In Europe stocks played catch up to the previous nights US move with the FTSE up 0.43% to 6,808, the DAX rose 0.74% and is back atop 10,000 at 10,004 while the CAC in Paris was 0.72% higher at 4,563. In Milan and Madrid stocks rose 0.85% and 0.68% respectively.

Locally the September SPI 200 contract lost 4 points overnight to 5,417 bid. But the rally in September iron ore – back above $90 tonne – and gold’s surge of more than $40 oz. might help the locally market a little today.

Today in Asia we get a speech from BoJ Governor Kuroda.

On global bonds traders in the US didn’t miss the import of the data with 10′s up 3 points (1.3%) to 2.62% but European bonds need a catch up on Yellen’s comments and closed lower across the board. Locally on the SFE overnight 3 year bonds dropped 2 points to 97.20 (2.8%) while the 10′s move in line with the US markets dropping 3.5 points to 96.29(3.71%).

On currency markets the US dollar was weaker early as European traders caught up with the Yellen comments and closed out short positions. But the data in the US put paid to this pretty quickly. The Aussie topped at 0.9430 but it is back at 0.9397 now.

Euro climbed to 1.3643 before slipping to 1.3607 while USDJPY is at 101.93. Only Sterling resisted the US dollars late charms closing at 1.7037 this morning.

On commodity markets gold surged more than 3% to $1320 and silver is back over $20 oz.

Iron ore for September delivery rose $1 to $90.50 tonne while September Newcastle coal fell 40 cents to $71.40. Copper climbed 2 cents to $3.07 and June Nymex crude was 0.43% higher to $106.62. On the Ags corn surged 2%, wheat was up 1.11% and soybeans climbed 0.78%.

It’s a data free zone in Australia today  but there is a BoJ Governor Kuroda speech during the day before a very quiet night with only EU current account interesting (maybe) tonight with nothing of note in the US.

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